Manufacturing Profits Dipped in Second Quarter

U.S. manufacturing profits slipped in the second quarter of the year as sales only inched ahead, a reflection of sluggish economic growth in the U.S. and abroad.

Manufacturers’ after-tax profits totaled $154.4 billion in the second quarter, down 2.5% from the same period a year earlier, the Commerce Department said Monday. Sales, meanwhile, reached $1.704 trillion, an increase of less than 1% from the second quarter of 2012.

The report, which measures quarterly results of manufacturers with assets of at least $250,000, offers a mixed picture of corporate finances in the factory sector. Private manufacturers have been a critical source of hiring and investment throughout the recovery, though the latest data reflect a soft patch for many businesses.

Makers of food, textiles, pharmaceuticals, plastics, wood products, minerals like ceramics and glass, and furniture enjoyed a good quarter for year-over-year, after-tax profits.

After-tax profits at furniture manufacturers were up nearly 38% year over year, possibly reflecting a resurgent housing market. For example, for the fiscal quarter ended July 27, La-Z-Boy Inc. said its earnings more than doubled.

“With housing and consumer confidence trending upward, we are optimistic about the future,” Kurt Darrow, the furniture maker’s chairman, president and CEO said last month in a call to discuss the company’s earnings.

Companies that produce petroleum and coal products, metals like iron and steel, and computers didn’t fare as well. A so-so market for commercial construction and cutthroat competition may be squeezing some firms.

For instance, Nucor Corp., the second-largest U.S. steelmaker by production, reported in July that its second-quarter profit fell 24% as production and prices declined.

“Overall, the outlook continues to be challenged by anemic economic growth and excess global steel capacity,” Nucor Chief Financial Officer Jim Frias said in a July call with analysts.

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